Interest rate cuts a beautiful Christmas or not
The reserve bank of Australia cutting interest rates by 25 basis points of the 6th of December, which gives the borrower or the people who want to be a borrower a perty good Christmas and new year.
But, there are always reasons for everything; the interest rate has gone up three times during last year and twice the year before, and suddenly, at the end of 2011, they cuts the interest rates by 25 basis points, why is that? Is it because the banks want to throw us a beautiful Christmas?
There is one interesting sentence in real estate industry, when the client is worried about the interest rates has gone up three times in one year, the agent would said, that is because we are in such a good economy environment, the bank has to rise the interest to slow the economy a bit before it fly too high too quickly, this is the best time entering the market. And when the interest rate goes down, they would say, what are you still waiting for, the interest rate has been cut down, you have save this much of money already, buy it now, this is the best time.
While some of them actually make sense, when the interest goes up, it means our market is flying at a speedy, and the banks or the government have faith in their people’s repayment ability, but when the interest rate goes down, sadly that means, the marker has lost the energy, and it need people to push from behind, that is when the bank is trying to do, active the market by cutting the interest rates.
So it may be a good thing for a moment, because you can pay less for your interests, but it also means that our economy is going on a downhill, if it continues, there will be an economy crisis again.
